For more information on how to address the challenge of Bad Sales Hires please contact me for an introduction to Force Management, LLC.
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Sales Channels – options aplenty, but what’s the right choice for your firm?
Posted on February 7, 2010 by Tom Martin
There are really two times that it is appropriate to make a decision about what channel(s) to use for your selling efforts: 1) before you launch your training/consulting firms, and 2) every day that ends in ‘y’ after your company is open for business!
Of course your ‘switching costs’ will rise in terms of changing your sales channel model after you are in business but, as history has shown, the right sales channels for a training firm change as the company evolves.
When I am asked what the right sales channel is for a training company I give the age old consulting answer of “it depends.” Since that makes for a cr@ptastic blog entry, let me share some of the thinking I go through after that initial answer.
I will also point out that a similar but slightly different thinking should constantly be considered for your delivery channels (ie using employees, independent contractors, or partners to deliver your training and consulting).
You might use this list of “critical questions” to guide your decision making process. For many of these questions you should peer through two lenses – first, your business today, and second, your business as you are thinking of evolving it.
- What is the makeup of the sales force in terms of their demand creation, business development, and general selling ability?
- What quality and quantity leads are your marketing efforts generating?
- Describe your current client base: industries, original lead source for the account, level/title of economic buyer, sales cycle length, etc.
- How would you describe the owners appetite for risk and amount of finances planned for investing in the business?
- Who are your primary competitors and what is their sales channel model? Do you know how and how much they pay their channel?
- What are your typical messages of differentiation against those competitors? And if any element of it highlights the difference in sales, delivery or account coverage model please highlight that.
- If you are one of the many training firms that typically says “We’re kinda different and we really don’t have competition on most deals” then please describe your typical selling message to convince prospects to not “do nothing.”
- How well can your owners handle a salesperson who is absolutely not ‘managed’ as much as they are ‘herded’? You might have to stick to employee sales channels just to prevent “Founders Ulcer”, a common and painful malady second only to “Crazy Founders Syndrome”1 in the training industry.
Feel free to pick up your fingers and set up a 60 minute call on my calendar if you would like to have a preliminary (no charge) conversation about what to do with these answers. In addition I would encourage you to review your answers with your sales, marketing and product development department heads – and compare answers.
To help in that conversation here are some pointers on what other training firms have done, using a typical example of a US-based training firm founded by 2 former sales people.
- Startup phase: US-only sales force consisting of the founders only, ie a direct sales force. The founders are also doing all the workshop delivery worldwide.
- Startup + 1 year: Founders are still selling and now independent contractors (ICs) are doing some of the delivery for ~US$1,500 per day
- Startup + 2: Independent sales agents (also ICs) are added in the US and probably getting paid commissions of about 40-45%
- Startup + 3: An international distributor is added who is likely paying 25% or so royalties back to the firm (ie they are keeping 75% and responsible for selling, teaching, and printing and translation of materials). Distributors are often in non-English speaking countries
- Startup + 4: Independent sales agents are added in English-speaking locales like Australia and the UK. Direct sales people are added in the US, one at a time with a fairly low base and high commissions upside. Because of the small size of the firm there is little channel conflict between direct sales reps, US ICs, non-US ICs, and global distributors however people ‘plant flags’ on their sales funnels for big account names near where they live, even though they have no active account penetration for them. Your stomach hurts a little about this but you assume you’ll be fine because you recruited good, ethical people
- Startup + 5: Because you have invested a lot of money in operations infrastructure as well as marketing, you’re now paying ICs commissions of about 30-35%
- Startup + 6: Because margins are so much higher with good selling agents than distributors, a decision is made to terminate all distribution partners and replace them with ICs in those countries
- Startup + 9: Because margins are so much lower with selling agents outside the US in every but the largest markets, a decision is made to terminate most international ICs and replace them with distribution partners. New distribution partners though as the people that were terminated 3 years ago are still not on speaking terms with you.
- Startup + 10: Because you now have a good brand recognition and have continued to build up your infrastructure you are now paying ICs commissions of about 25%. However you are still about 10 points lower in margin than you were in year 2.
Clearly there are a lot of different variations that I have seen that aren’t reflected here, but I’m hoping that this was good food for thought.
1 While I haven’t written about Crazy Founder Syndrome (CFS) yet, anyone who has ever talked to me for more than 30 minutes about the training industry knows I feel the problem is rampant. I’m not sure if I coined the term but for now I’ll take credit for it … I should also point out that “crazy” has many definitions (though no, I don’t mean ‘crazy like a fox’) – so when I refer to a founder as having CFS I sometimes mean that they are intensely passionate about their own firm but have some blinders on about their firms weaknesses and that they also think that because they have such an easy time selling their wares, any half-decent sales person should be sell exactly how they sell and be successful. Another version of CFS is the founder who is generally referred to with 4 letter words (and not the nice ones) by most former employees and partners.
Filed under: Channels, Exit Strategy, General Business, Sales | Tagged: sales training | Leave a Comment »
The $10 a year website for new training firms and independent contractors
Posted on November 16, 2009 by Tom Martin
I’ve been talking to a number of people recently who fall into a couple of camps
- starting a training firm, or at least hanging out a shingle to be a training firm
- starting life as an IC for a training firm
- starting to represent multiple firms as an IC and wondering how to convey your new multi-faceted message
Some books and articles advise new ICs and business owners to avoid making the time and monetary investment of setting up their own website. I agree in principle because many new entrepreneurs focus on the wrong things when they start their business – especially when it comes to ‘advertising, marketing and promotion.’ However I know that many salespeople lose credibility with their prospects who look to the web to ‘authenticate’ the people selling to them.
I would suggest two options that can work for a new IC – one of which that can also work for a new 1 to 3 person training company.
Filed under: General Business, IT, Marketing, Operations | Leave a Comment »
Big Animal Pictures
Posted on November 7, 2009 by Tom Martin
Over the last few months I have been having more conversations with small training firms as well as people thinking about hanging out a shingle as a sales trainer. In addition to talking about key issues like their Exit Strategy I have, almost without fail, brought up the challenge of how they talk about what they do with their prospects in a simple and concise manner.
Disclaimer: Working closely with a company that does sales messaging (Force Management) influences my bias to the importance of this area.
When I was at OnTarget/Siebel Systems I worked for an executive, Nick Nascone, who was fond of talking about Big Animal Pictures¹. Big Animal Pictures in the training world are the graphics that you use to talk about your business – and can be represented on a Powerpoint slide or hand drawn on a whiteboard, flip chart or napkin.
I believe all firms need Big Animal Pictures that are easy for your sales team to remember and articulate – and that resonate with your customers. You need one picture for “What we do” and another for “How we do it.”
Here is my main Big Animal Picture – what I call the Value Chain for Training and Consulting Firms. Below are some examples from inside the sales training world:
- Miller Heiman and their Sales System
- Channel Enablers and their ChannelPro methodology
- Infomentis – what they do and how they do it
- Think Inc. and their Value Proposition
- Force Management and a real life napkin drawing
- Huthwaite and the SPIN Solution Suite
- Breakthrough Sales Performance showing how their approach differs from tradition
- KLA Group and their Curriculum
If you don’t have a Big Animal Picture yet here are some suggestions as you go about creating them
- “What we do”
- Think about the areas you impact when you serve customers.
- How do you ‘bucket’ or group your solutions in a typical presentation or conversation
- “How we do it”
- How do you implement your solutions – is there a process or methodology you follow for implementation or change adoption?
- How are you different from your nearest competitors?
- Other questions to ask yourself
- Can my salespeople easily articulate this with a pen and a blank piece of paper?
- Is this clear enough that my current customers would agree this “sounds like you”?
- Does this look identical to how your competitors describe themselves?
Get outside advice on your Big Animal Pictures and investigate how others describe themselves – in the training world and in your customer base. Feel free to contact me if you’d like me to give you input on your ideas.
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¹ The original Big Animal Picture book was published in 1903 and contained big color pictures of cats, dogs and cows. We haven’t made much progress in 100 years.
Filed under: IP/Product, Marketing, Sales | Leave a Comment »
Seeing my name in lights
Posted on November 4, 2009 by Tom Martin
Many thanks to Dave Stein for his kind words and taking up so much space in his blog with this interview of me.
If you aren’t a subscriber to Dave’s blog you can do that here. Dave is the only analyst solely focusing on the sales training space and posts content that is of interest to both training firms as well as buyers of sales training (you know, everyone else in the world!).
Dave runs his research through his firm ES Research, where you can read some free content or subscribe to get access to deep dive reports on training companies or assorted topics related to training.
Please do me the favor of checking out Dave’s blog.
Filed under: General Business, Marketing, Operations, Sales | Tagged: sales training | Leave a Comment »
Moving to Virtual Instructor Led Training
Posted on June 25, 2009 by Tom Martin
And now for something completely different1 … instead of passing along my own bright ideas I thought I would show that I live my life as suggested by a former boss – surrounded by people smarter than me. One of those smart peeps is Ian Savage, a consultant who has reinvented himself as the master of “Virtual Instructor-Led Training (ILT).”
For those of you not familiar with the concept, consider yourself lucky! Most of the training firms I know have been dragged down this path because their biggest clients have imposed travel freezes that effectively kill off their chances to make money the old-fashioned way of running two day workshops. Virtual ILT is another name for “Web-Based Instructor-Led Training,” and I’m assuming most of you don’t need a decoder ring to know what that implies.
Some firms, like Infomentis, have already invested heavily in this area. When I first heard about what they were doing I was shocked because I didn’t realize web-meeting technology had gotten to the point of allowing breakout rooms so you could mirror a ‘regular’ class.
Of course this is where the danger lies … assuming you should base your Virtual ILT on your face-to-face ILT workshops. Ian spells out the top 10 mistakes he made along the way on his journey to becoming the master of vILT.
I’d encourage you to read the white paper “So you think you can WebEx” or pass it along to the people responsible for sales or product development in your firm. It may open their eyes on a new potential revenue stream, and a way to avoid losing revenue to travel freezes. Ian is available on a project or retainer basis if your firm would like to develop a Virtual ILT solution in less time and with fewer “first-timer” mistakes.
Cheerio,
1Instead of a reference to a rock song this is even better, a reference to Monthy Python. Even more appropriate since the author of the attached article is also British
Filed under: Delivery, IP/Product, Sales | Tagged: Product Development, Web 2.0 | Leave a Comment »
